The Estonian Parliament adopted on 21 November 2018 changes to the Income Tax Act, which inter alia amended an Article 48 (5)1 on taxation of fringe benefits, according to which from 1 January 2020 the compensation of public transport tickets used for the transportation of employees between their place of living and the place of employment will be no longer subject to fringe benefit taxation at the level of their employer.
For this purposes, the exemption will apply to individuals working under the employment agreement, as well as to members of the management and supervisory board, individuals rendering their services under the contract for services, authorisation agreement or any other contract under the law of obligations.
According to the explanatory notes to the draft law changes, the new exemption will not be applicable to taxi transport. How the new exemption will be applied to various types of public transportation (e.g. also to ferry or flight tickets), which can be used for the transportation of employees between their place of living and the place of employment, will be hopefully addressed by the newsletter to be published on the webpage of the Tax and Customs Board.